NYC closing Kushner loophole landlords use to dodge scrutiny

AP Photo, Jared Kushner, No available, FILE - In this Aug. 29, 2018, file photo, White House Adviser Jared Kushner waves as he arrives at the Office of the United States Trade Representative in Washington. New York City lawmakers voted Wednesday, May 8, 2019 to close the "Kushner loophole" that critics say encourages landlords to file false paperwork with the city. The rule approved by the City Council will require regulators to double-check that landlords are telling the truth in construction permits when they claim to have no specially protected tenants who pay low rates. Mayor Bill de Blasio is expected to sign the new rule into law. (AP Photo/Jacquelyn Martin, File)

NEW YORK (AP) — New York City lawmakers voted Wednesday to close the “Kushner loophole” that critics say encourages landlords to file false paperwork with the city.

The rule approved by the City Council will require regulators to double-check that landlords are telling the truth in construction permits when they claim to have no specially protected tenants who pay low rates. Mayor Bill de Blasio is expected to sign the new rule into law.

It follows an Associated Press report last year that found Jared Kushner’s family real estate company had falsely claimed it had no rent-regulated tenants in dozens of buildings when, in fact, it had hundreds. Kushner is President Donald Trump’s son-in-law and adviser.

Critics say many landlords file false paperwork to avoid extra scrutiny that could stop them from using repairs and construction to drive out such tenants and replace them with ones who pay more.

The AP cited a study by the watchdog group Housing Rights Initiative that found New York City landlords filed paperwork falsely claiming they had no rent-regulated tenants more than 10,000 times in the 2 ½ years through June last year. It also found that the Kushner Cos. filed false paperwork at least 80 times for 34 buildings over a three-year span when the company was run by Jared Kushner.

The city fined Kushner Cos. $210,000 for false filings last year after the AP report.

The Kushner Cos. has said that the paperwork was filled out by third parties and mistakes were corrected soon after they were discovered. It has said it does not use construction to push out tenants who pay low rates.

The rule approved Wednesday will require regulators to check with tax records to make sure landlords are telling the truth. If the paperwork is false, the city’s investigations unit and the state attorney general’s office, among other authorities, must be alerted and all the landlord’s buildings audited.